GBP/USD tumbles to 3-week lows, below 1.3100 handle

Haresh Menghani FXStreet

• Extends overnight sharp retracement and drops back closer to monthly lows.
• Weighed down by resurgent USD and widening US-UK yield differential.
• Q3 US GDP to be a key determinant ahead of next week’s BOE meeting.

The GBP/USD pair extended overnight sharp retracement from 7-day tops and tumbled to 3-week lows, below the 1.3100 handle, during the early European session on Friday.

Currently trading around 1.3075 level, testing session lows, the pair remained under intense selling pressure for the second consecutive day and was being weighed down by resurgent US Dollar.

Speculations that the next Fed could be more hawkish, coupled with progress over the US President Donald Trump's proposed tax reforms underpinned the greenback demand and has been one of the key factors weighing on the major.

Adding to this, some renewed uptick in the US Treasury bond yields, widening US-UK yield differential, further collaborated to the pair's downfall back closer to monthly lows, touched earlier this month.

Meanwhile, possibilities of some stops being triggered, on a break below the 1.3100 handle, might have also contributed towards aggravating the selling pressure over the past hour or so.

It would now be interesting to see if bulls are able to defend 100-day SMA, especially after yesterday's awful UK CBI realized sales data. Today's key focus would be on the release of advance US Q3 GDP figures, due later during the early NA and would drive the major ahead of next week's key BOE monetary policy meeting.

Technical levels to watch

Immediate support remains at 100-day SMA, near mid-1.3000s, below which the slide could get extended towards the key 1.30 psychological mark. On the upside, any recovery attempts might now confront immediate resistance near the 1.3100 handle and is closely followed by a horizontal barrier near the 1.3125-30 region.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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